IBM Reports Gains in Q3 Results

UPDATED: IBM officials on Wednesday reported a 9 percent jump in third-quarter revenues and said they expect customers to increase their IT spending next year.

Noting that the economic downturn that has plagued the industry appears to be slowing, IBM officials on Wednesday reported a 9 percent jump in third-quarter revenues and said they expect customers to increase their IT spending next year.
The Armonk, N.Y.-based companys $21.5 billion in revenue was an increase over the $19.8 billion it generated during the same period a year ago. Earnings for the three months ended Sept. 30 were $1.8 billion, a 5 percent increase over the $1.7 billion in 2004.

"We are beginning to see signs that he economy has stabilized," Chairman and CEO Samuel Palmisano said in a prepared statement. "As we look to 2004, more customers are expected to increase their investments in information technology. While demand is not yet across the board, it is strongest in the areas where we have positioned the company and strengthened our capabilities."

For example, Palmisano said he expects to need 10,000 new positions in areas such as services, middleware, Linux and standards-based hardware and software. He also said $200 million of the companys $700 million training budget will go towards current employees to develop skills for such areas.
IBM Global Services saw revenues jump 17 percent in the third quarter, to $10.4 billion, helped in part by the addition of the PricewaterhouseCoopers business.
"During the quarter, we believe we held or gained [market] share," John Joyce, senior vice president and chief financial officer, said in a conference call with analysts.

Software revenues also jumped 11 percent, with middleware such as Web-Sphere and DB2 increasing 14 percent.
Total hardware revenues dropped 1 percent, to $6.7 billion, though revenues from the Personal Systems Group grew 2 percent, to $2.8 billion. The Systems Group, which includes servers and storage, grew 6 percent, to $3.2 billion.
Joyce said the company lost some share in high-end storage, but gained in FastT mid-range storage and tape.
In servers, "the challenge is to continue to gain share and to control costs" while not hurting profits, he said. IBM will continue improving on the new zSeries 990 mainframe, Joyce said, including increasing to 32 the number of processors it can hold.
Looking forward, he said he expects the Technology Group, which includes IBM Microelectronics, to continue improving after a difficult second quarter, and for PC sales to grow.
Editors note: This story has been updated since its original posting to include information from IBMs conference call with analysts.